“The year of online video” has been touted every year since 2007. Looking back, there was probably just cause for 2007 to be proclaimed as being the dawn of a new era for the online world – YouTube had been acquired by Google for $1.65bn in November of 2006, and the possibilities for online video seemed endless.
It was speculated that online video could be one of the final stepping stones in shifting ad spend from traditional sources (television, radio, print) to the Internet. In 2009, three years on, online ad spend nearly overtook television ad spend in the UK for the first time, and is now worth an estimated £3.5bn according to the IAB. However, online video is not yet the reason for this expenditure – the online video advertising market was worth £28.3m in 2009, which pales in comparison with the online search market, worth £2.1bn, or the display market, worth an estimated £700m.
That said, online video advertising spend shot up by 140% from 2008, and is predicted to double again this year. This compares extremely favourably to the overall growth of 4.2% that online advertising experienced during 2009, and offers a clear indication of what will be driving growth in 2010.
Regarding advertising spending, online video may still be in its infancy, but the fact that 34m people now watch videos on the internet in the UK in a month paints a different picture – online video is now a mainstay of modern society, video viewing accounts for 41% of all time spent online.
Where are people watching online videos?
With online video potentially being one of the catalysts for growth in online ad spending in 2010, is it fair to say that 2010 is “the year of online video”? Well, 31.2m people watched an online video on a Google owned site in the month of April (driven by YouTube activity), and analysts are predicting that YouTube is going to turn a profit for the first ever time this year. This is a big audience, and they are consuming a lot of content – an average of over 100 videos per month each – maybe the new era is finally upon us?
After Google/YouTube, the BBC and Facebook both command a monthly audience of over 10m online viewers. Elsewhere in the top ten sites by video viewers, user generated content sites such as Megavideo and Dailymotion feature alongside traditional long-form content producers such as ITV and Sky. Although other platforms are popular, YouTube’s dominance of the market can be seen pretty clearly when one examines the share of videos viewed – YouTube accounts for one in every two videos watched online in the UK.
Who are the people watching online videos?
In total, over 33.6m people aged 15 or over watched at least one online video in April, an increase of 2.4m people (an 8 percent growth) over the last six months. This is disproportionately high versus the growth of the total online population, which has increased by less than 2 percent during the same period. As such we can see that it’s not just because the total internet population is growing that more people are engaging in watching online video content – 9 out of 10 people online now watch at least one video per month.
In terms of who the viewers are, they’re broadly representative of the total online population – 52% male and 48% female. With regards to the ages of viewers, again they are representative of the total online population. However, when we look at consumption, we see that men spend far longer watching online video than women (70% of viewing time is done by men). Additionally, 48% of time spent streaming is accounted for by 15-34 year olds (whereas that age bracket only accounts for 40% of viewers).
What is the typical behaviour of these users?
How do people get to the videos they are watching? 53% of all visits to YouTube came from three sources in April – two search properties, Microsoft and Google account for 19% of visits each, with 15% from Facebook. Considering how users navigate the web in modern times, with search being the de facto method of getting to any site (each web user averages 138 searches per month), it’s slightly surprising that it wasn’t a larger proportion of visits that were derived in this way. This is evidence that the YouTube brand resonates strongly with its users, and that the search function on YouTube is perceived by users to be effective, as they do not feel the need to search on a traditional search engine to get to the content they want. Added to that, YouTube content can be hosted elsewhere, and the long tail of sites that have YouTube videos on them give users many opportunities to navigate to the site.
The viewing habits of online video watchers in the UK closely mirror that of television viewers, with peak viewing time between 20:00 and 21:00 online, and between 21:00 and 22:00 for television (television numbers from BARB). This is a clear indication that content made available online is now being watched in a more lean back way, when people are relaxing at the end of a day – this mainstreaming of online video watching is the clearest signal that advertising money will continue to move towards online video over the coming year(s).
How is the market evolving?
Adding to the point that online video viewing is mainstreaming, a tipping point has occurred since the start of the year in the UK. In January, for the first time, the average video view lasted for over five minutes. Using the IAB’s guidelines that short form video content is defined as any video that lasts fewer than five minutes, and long form content is defined as any video that lasts more than five minutes, we can now see that the average video watched online is long form. This is a real boon for the online ad industry, as the YouTube example (five years of losses before this year) shows, it is very hard to monetise user generated content – the shift of consumers to watching longer form and professionally produced content opens up a new opportunity for advertisers to find wholly engaged users that are receptive to receiving advertising messages in return for being able to access quality content.
Not only are users spending more time on each video they watch, they are now watching more videos online too – in April of this year the average online video viewer saw 184 different videos; compared to 18 months prior when people watched an average of 124 videos online. This 48% jump coupled with the increasing time per video has meant that an average viewer in the UK now spends 15.6 hours watching online video, up from 7.5 hours in November 2008.
It’s not just on the PC that people are watching more and more video – video viewing on mobile phones is rocketing too – 14% of all smartphone owners watched at least one video on their phone in April of this year; up 40% vs April 2009. With smartphones becoming more readily available in the marketplace over the last year or two, and the technology and connection speed behind them reaching a stage where pretty much everything that is possible on the PC Internet is now possible on mobile handsets, it is likely this trend will continue going forward.
Why should we care?
Looking ahead, with increasing amounts of quality content fed through online channels, it’s likely that more and more homes will shift away from being TV and online homes, and become online only. This will mean that there will be a swathe of people that cannot be reached by TV advertising alone, and advertisers will need to start considering placing adverts alongside online video content in order to reach their desired audience. Recent research conducted by comScore for .FOX Networks has shown that online video advertising works harder and faster than traditional online display advertising, so the opportunities for brands to reach these audiences in a manner that they are actually already accustomed to (i.e. while they are engaged in televisual content) is becoming a reality. Added to that, the growth predictions for online video ad spend far exceed the growth being touted in other online advertising – you might even say that 2010 could be the year of online video!
Toby Crisp
Manager Marketing Solutions, comScore
Twitter: comScore